MC Wholesaling Pty Ltd v Zheng

In the case of MC Wholesaling Pty Ltd v Zheng, the plaintiff companies brought proceedings against the defendant, making serious allegations of fraud. The plaintiff companies subsequently discontinued the proceedings. The court was required to determine whether the judge's order for indemnity costs was justified, the reasonableness of the rejection of a Calderbank offer, the appropriateness of extending the benefit of the Calderbank offer to a party later joined to the proceeding, the validity of a non-party costs order against the sole director of the plaintiff companies, and the correctness of varying previous costs orders to provide for payment on an indemnity basis.

The court found no error in the judge's decision to order indemnity costs. The allegations of fraud were central to the proceedings and justified the indemnity costs order. The rejection of the Calderbank offer was deemed unreasonable, and the extension of the Calderbank offer's benefit to the later joined party was justified as the same allegations were made against both the offeror and the joined party. The non-party costs order against the sole director was upheld as the director was found to be the driving force behind the allegations of fraud, unreasonable rejection of the Calderbank offer, procurement and maintenance of freezing orders, and discontinuance of the proceedings. The court also found no error in varying the previous costs orders to provide for payment on an indemnity basis.

The leave to appeal was refused for most of the issues, but granted in respect of the non-party costs order against the sole director. However, the appeal was ultimately dismissed. The case provides clear guidance on the application of indemnity costs orders, the rejection of Calderbank offers, the extension of Calderbank offers to later joined parties, non-party costs orders, and the variation of previous costs orders.